Payouts begin in massive FTC weight loss settlement

By Hank Schultz

- Last updated on GMT

Payouts begin in massive FTC weight loss settlement

Related tags: Weight loss

Another high profile FTC case reaches a conclusion of sorts this week as the agency started mailing out checks to consumers it says were mislead by claims for the weight  loss product Sensa.  The payout totals more than $26 million.

“It’s one of the bigger settlements I’ve seen,”​ attorney Justin Prochnow of the firm Greenberg Traurig told NutraIngredients-USA. “Usually they are in the $1 million to $5 million range.”

No diet, no exercise—just sprinkle

The more than 477,000 refunds stem from a January 2014 settle with the marketers of Sensa, who claimed that consumers could “sprinkle, eat, and lose weight” by using the product. According to the FTC’s complaint​, the California-based company, its parent company, and two individuals, including the product’s inventor, deceptively advertised that the powder enhances food’s smell and taste, making users feel full faster, so they eat less and lose weight without changing their diet or exercise routine. The FTC’s complaint alleged, among other things, that the defendants did not have competent and reliable scientific evidence to support the weight-loss claims. The defendants charged $59 for a one-month supply of Sensa.  The refund checks average about $54.

In addition to getting into trouble over its claims, the marketers of Sensa also crossed the line when it came to testimonials, the FTC alleged. The agency’s complaint said the company failed to disclose that some of the people who supplied testimonials on the product were paid to do so.  In some cases the consumers who supplied the testimonials were paid $1,000 to $5,000 and given trips to Los Angeles, the agency alleged.

Faulty research

In addition to Sensa Products LLC, defendants named in the suit were parent company Sensa, Inc., Sensa Inc. former CEO Adam Goldenberg, and Sensa creator and endorser and Sensa Products part-owner Dr. Alan Hirsch with deceptive advertising for making unsubstantiated claims about Sensa. Hirsch, who operates the Smell and Taste Research Foundation in Chicago, conducted the research that the agency cited as inadequate.  Hirsch claimed to have conducted more than 200 studies on the product.  But a review by the Chicago Tribune​ earlier this year found that few of the studies were published in peer reviewed journals and many of his conclusions were based on studies with very small sample sizes and/or with questionable or unclear methodology.

The agency originally fined the defendants $46.5 million, but reduced the judgement based on the defendants’ inability to pay.  The agency did say that the company sold more than $364 million worth of Sensa between 2006 and 2012.

Easy winners

Prochnow said the agency rarely brings cases where it might have some doubt about about whether credible scientific evidence exists to back up claims on products.  If the agency begins the process of seeking information, it usually is a sign that it believes it has a winner, he said.

“It’s fairly rare that once FTC gets involved to the point of issuing a civil investigative demand wanting to see all of your substantiation related to the product that they wouldn’t proceed with the whole process.  Usually by this point they have done a lot of looking and they believe you are not going to be able to satisfy them on the subject of proof,”​ Prochnow said.

“They want the low hanging fruit.  They are not going after the really difficult cases. They want the 90/10 cases, not the 51/49 cases. They don’t want to lose a case in the public eye anymore than a prosecutor wants to lose a high profile criminal case,”​ he said.

Related topics: Regulation, Product claims

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